Posts Tagged ‘company’

Avoiding Strategic Planning Failure

Tuesday, April 14th, 2015

This week’s guest is Leslie Heller, a management consultant focused on business strategy, change management and growth initiatives. He has 15 plus years in consulting and business leadership roles, where he led teams of over 1,200 employees, held accountability for over $850 MM in sales and $36 MM in payroll, and implemented growth initiatives in diverse business lines. Leslie’s motivation is to create an environment where businesses can implement change and deliver value for their customers. Leslie also volunteers as a mentor with Enterprise Toronto helping young people build businesses.

 

The strategic planning process is the time to develop corporate direction and vision that create value and excitement for companies and their stakeholders. This article highlights three points to include in the planning process that increase the chances of implementing a successful strategy. While no exhaustive list of what it takes to avoid strategic planning failure exists, these points will help planning at the team, project, division, business unit and company level.

1. Strategy and Execution

We often hear that “Strategies most often fail because they aren’t well executed”, but how “right” could the strategy have been if it failed in execution? If a strategy failed in execution it is likely that one or more of the following three points was missed in the strategic planning process:

i.     Ensuring the right skill-set is in place
ii.    Ensuring adequate resources are available
iii.   Ensuring processes to track, highlight and resolve issues throughout the project life-cycle are implemented

The ability to execute a strategy is part of strategic planning. When strategy ignores internal capabilities or does not address how capabilities will be addressed there is increased risk in delivering the strategic objectives. Spend the time to honestly assess internal capabilities upfront to avoid frustrating time-consuming issues later on.

2. Beware the Fouled Up System

In the article “On the Folly of Rewarding A While Hoping for B” (Steven Kerr, Academy of Management Journal, 1975, www.ou.edu/russell/UGcomp/Kerr.pdf), the author addresses how reward systems influence behaviour, and highlights examples where the behaviour does not align with the intent of the reward system. You likely have your own examples; for instance, when next years’ expense budget is based on current years’ spend, do all managers strive to find one-time (non-recurring) expense saving opportunities? How about if they are already surpassing their Plan… near year-end? Or consider performance metrics that measure attendance and productivity when a company really wants to measure employee engagement and quality. The down-stream impact of mistaking attendance for engagement or productivity for quality is increased customer support and rework that is often difficult to address, correlate and impact after the fact. Perhaps worst of all is the risk of setting strategy on misinterpreted business unit performance.

Selecting the right tracking metrics to influence employee behaviour within the strategic plan can be tricky and needs to be addressed, not only by strategy teams but by operational leaders who are more likely to identify disconnects between the intent of the reward system and the anticipated employee behaviour.

3. Change Management

Corporate strategies result in projects and projects result in change. Even positive change creates anxiety and needs to be managed (think about the last time you upgraded your corporate coffee system!). Change management is the act of using a structured process to lead the people side of change to increase the likelihood of project success.

According to Prosci, the world’s leading benchmarking research and change management product company, the top issues that derail change initiatives are ineffective project sponsorship, employee resistance to change and not using a structured change management approach. Change management has gained considerable attention lately and change management offices have popped up in banks and other institutions over the past few years. Including change as a topic in strategic planning, and then managing change with structured processes and communication plans should be built-in to the strategic planning process.

Summary

In summary, (i) ensuring executional capabilities are part of strategic planning, (ii) figuring out the best metrics to use to align employee behaviour to a new corporate direction, and (iii) using change management methodologies, will help your organization avoid strategic planning failure. Ensure that you include these on your strategic planning agenda!

For further information on avoiding strategic planning failure and change management you can reach Leslie Heller at lheller00@yahoo.com (Note: this is a summarized version of Leslie’s presentation at the 5th Annual Strategic Planning for Boards conference held in Toronto earlier this year.)

Share

Your Company, Your House

Tuesday, March 3rd, 2015

I heard a wonderful metaphor a couple of weeks ago.To grow your business, think of your company as a house

Think of your company as a house.

The functional areas or departments – for example sales, marketing, operations, HR and finance – each represent a room in the house.

You can’t have a house without rooms and rooms have no purpose on their own. A house is not a home if it’s just a bunch of rooms.

The construction materials with which your house is built are, for example, peoples’ skills and experience; processes that enable the areas to function effectively; IT systems that provide data to manage performance.

Your culture is the mortar holding your house together.

What happens when we decide we want to grow? After all, as business owners, our main – if not sole – focus is on growth.

Growth can be achieved in 2 ways. By making one or more rooms in your existing house larger or by designing and building a bigger house.

1.  Making one or more rooms bigger

You can do this by, for example, adding more sales people to bring in more orders, or by launching a marketing campaign to generate more leads.

But making one room in a house bigger puts pressure on the other rooms. That has consequences. If you don’t believe me, try making one of your children’s bedrooms larger while making another one’s smaller.

As one room or area grows, everything else is forced out of proportion. You may even put pressure on the structure of the house and cracks will appear as the bricks and mortar strain to hold everything together.

A couple of examples of the business equivalent are tight cash flow, an increasing backlog of orders or losing good people.

2.  Designing and building a bigger house

Design and build a larger house and you grow, while structurally keeping everything in proportion.

How does this apply to your Company?

Designing and building a bigger house is equivalent to developing and executing a business strategy.

Each of the functions, or rooms, still has its own strategy. But they work in the context of, and by supporting, the strategy for the entire house/business.

If you involve your team in the design, the end product will be better and they’ll be more committed to getting it built.

I like this metaphor. What do you think?

 

If you enjoyed this post you’ll also enjoy Sustainable Growth – How To Achieve It

Click here and automatically receive our latest blog posts.

 

Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

3 Reasons Why Strategy Isn’t Dead In The Water

Tuesday, February 3rd, 2015

I hate sweeping generalizations.Is strategy dead, or dying?

Strategy is dead is one that I particularly dislike.

To say that, it seems to me, is to say that it’s a complete waste of time for every company, regardless of size or industry, to have a strategy.

An article appeared in the Globe and Mail late last year, headline “Why Strategy is Dead In The Water.” It was based on an earlier article in Forbes magazine, headline “Is Strategy Dead? 7 Reasons The Answer May Be Yes.”

We’d gone from strategy might be dead to signing its death certificate – in the space of two headlines.

Here are 3 of the reasons the Forbes author offers to support his argument.

1.  Incrementalism has been disrupted by disruption. The argument is that managers talk big but really focus on delivering incremental change. Hopeless now when, for example, companies like Uber disrupt an industry. Disruptive change isn’t new – otherwise we’d all still be driving horse drawn buggies – but is it realistic to expect it in every single industry, simultaneously?

2.  Innovation is occurring with high variance outcomes. Contingency plans are used to deal with the most likely market reactions to a strategy. Now, it’s argued, there are too many possible outcomes to anticipate, never mind plan for. Assume that intuition, common sense and gathering information can no longer help us isolate all of the possible outcomes. Does that prevent a business selecting one or two of the most likely ones and running with them in a controlled, limited way i.e. hedging its bets?

3.  The past is no longer a good predictor of the future. Because life expectancy has increased, consumer behavior has changed and we are able to quickly access data, it is argued that the future no longer looks anything like the past.

Could that not have been said about the rise of consumer spending in the 1950’s, the shift to low cost, offshore production, or half a dozen other seismic changes that have taken place?

Has the past ever been a good predictor of the future? The old adage is, if we don’t learn from the past, we are doomed to repeat it. Isn’t adapting a way of learning?

Isn’t the entire argument that strategy is dead, or dying, rather like throwing out the baby with the bathwater?

I’ll comment further next week.

 

If you enjoyed this post you’ll also enjoy Strategy Working? Then Don’t Make These 5 Mistakes

Click here and automatically receive our latest blog posts.

 

Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

How Do You Know If Your Company Will Fail?

Tuesday, October 21st, 2014

Let me go back almost 20 years to give you some context.How do business owners know if their company is on the path to decline?

My last real job (that’s what my wife calls the jobs I had before I became a consultant) was running the Canadian subsidiary of a 100-year-old, multi-national corporation.

Our owners, a much larger, publicly listed corporation, had bought us years before as a ‘cash cow’. There was, therefore, very limited investment in any aspect of the operations.

When I joined, the core business was rapidly being replaced by a new technology. We developed a new strategy for Canada and quickly set about executing it.

But, even when we appeared to be having some success with the new strategy, I used to ask myself if it was already too late – and how I would know if it was.

Now let’s return to the present day.

I’m re-reading Jim Collins’ book “How The Mighty Fall”. It was written as a result of a CEO asking how he would know if his company, successful as it had been, was already on the path to decline.

Imagine me asking the same question as the CEO of one of America’s most successful companies – several years before he asked it. It would indeed be remarkable, were it not for a few important details.

Clearly the circumstances were different. The CEO was being more farsighted than my employers had been.

And, more importantly, I’ll bet that many business owners have worried – and still worry – over the same question. I’m sure they started long before I asked it and some are still asking it now.

So why even raise the topic?

For one thing, if Collins’ book had been available in the mid-1990s, I would have had my answer. I would have known that, in time, the company would be sold to a competitor and, when that didn’t work, be absorbed by another competitor and almost completely disappear.

For another, “How The Mighty Fall” should be mandatory reading for all business owners. Or at least for those who understand that their past successes offer no guarantee, or even protection, for the future.

One point that caught my attention – and I’m only on page 48 – is that complacency was responsible for only one of the failed companies.

Another is that being an innovator was no protection from failure.

I would have assumed the opposite in both cases. So, perhaps I’m not as far ahead as I thought…………

 

If you enjoyed this post you’ll also enjoy Targets Are Targets, Results Are Reality

Click here and automatically receive our latest blog posts.

 

Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

Can A Vision Still Get Results If You Call It Something Else?

Tuesday, July 29th, 2014

I use words like Vision or Mission selectively.A vision by any other name can still get results

I learned quickly, when I started ProfitPATH, that, while some business owners like them, others tune out immediately when they hear those words.

You can almost feel them physically withdraw from the conversation.

And I have no problem with that.

I suspect some entrepreneurs feel that way because:

  • In their eyes, the people who use terms like Vision and Mission have never actually had to deliver business results. They’re, typically, consultants and authors of business best sellers.
  • Anyone who has been very successful and uses language like Vision or competitive advantage runs a “large”, public corporation and so is totally unlike them.

You could argue they’re making sweeping generalizations – but they’re far from the only group of people who do that!

But what, for example, is a Vision?

Isn’t it just a picture of what a company wants to be in the future? Where the owner wants to take it? How it would like to be seen by groups like customers, suppliers, even competitors?

Over the last 13 years, I’ve learned that even the most skeptical business owners will agree that if you don’t know where you’re going, you’ll never get there.

So what matters more – the concept, or the words or label you use to describe it?

Isn’t there a risk that if we get too hung up on the label, we’ll turn our back on the benefits that flow from the concept?

There’s no doubt in my mind that having a clear picture of where you want your company to be, what you want it to look like, in 3 years’ time is one of the foundations for success.

Why am I so sure of that?

Alan Mulally is widely credited with turning Ford around. He was quoted recently as saying “What I’ve learned is the power of a compelling vision.”

He used the 2 words “One Ford” to focus a troubled, global company and produce 19 consecutive profitable quarters.

The 2 words were the tip of a more comprehensive picture, which was broadly understood and provided a compelling, actionable and clear direction.

Another example is John Kennedy’s vision for the U.S. in 1961 – to land a man on the moon and return him safely to earth by the end of the decade.

Few believed it possible at the time.

But we know what actually happened.

 

If you enjoyed this post you’ll also enjoy Strategies That Get Results Are Developed By Thinkers And Doers

Click here and automatically receive our latest blog posts.

 

Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

The Keys To Executing A Strategy And Getting Results

Tuesday, July 1st, 2014

I really liked a recent post in the Wall Street Journal (WSJ).The keys to executing a strategy and getting results

It said that the main requirements for successfully executing a strategy are:

  1. Clear goals for everyone in the organization, that support the overall strategy
  2. A way to regularly measure progress toward those goals
  3. Clear accountability for that progress.

That’s a very nice, clear, succinct way to put it.

I must admit that I was a little relieved when I saw their next sentence, which said that these 3 “are the basics”.

That clarification allows the discussion to continue, so that additional factors can be included. The authors themselves went on to say that good execution also requires facing reality and a strong culture of execution.

Those are 2 of the points made by Larry Bossidy and Ram Charan in “Execution”, one of the best books ever written on the subject.

On the other hand, I was pleased to see the 3 main requirements.

Why? Well, they correspond nicely with the 4 Risks I’ve talked about in recent posts. Here’s how.

Risk #1 – No Clear Growth Path:  The ‘overall strategy’, mentioned above, incorporates the path a company takes to grow to size in the future.

Risk #2 – No Link To Action:  A key step in linking a strategy to action is to develop clear goals. The best goals are specific, measurable, and attainable and have deadlines. They are also a result of prioritizing everything that has to be done so that limited resources can be allocated to get the best return.

Risk #3 – No Buy In:  Giving every employee clear goals, which support the overall strategy, is an important factor in getting buy in. Involving employees in developing those goals is another. A third is frequent, ongoing communication so that everyone understands how achieving their goals will help the organization achieve its goals.

Risk #4 – No Accountability:  A process for measuring progress toward goals and regular review meetings are the foundations for accountability. They enable the reasons for progress – or lack of it – to be assessed objectively. Those accountable can be recognized, paid bonuses, even promoted – or they may leave the company.

So I’m delighted that the main requirements for successfully executing a strategy, identified by the WSJ, are the same things we have been helping companies with for over 12 years.

 

If you enjoyed this post you’ll also enjoy 5 Traits Effective Business Owners Share

Click here and automatically receive our latest blog posts.

 

Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

Risks 3 and 4 to Growth – And How To Avoid Them

Tuesday, June 24th, 2014

During the last 12 years we’ve worked with well over 100 companies ranging in size from less than $1 million to over $300 million in annual revenues. They were

  • In a variety of industries, from manufacturing to software development.
  • All at different stages in their lives, for example in some, growth had stalled, while others were growing quickly – too quickly.Risks 3 and 4 to business growth and how to avoid them

In a recent post, I talked about the 4 things we’ve done for the ones that we know, with the gift of hindsight, achieved the results they wanted.

Was their success solely attributable to what we did for them?

I can’t prove that. But I can say this, ignore these 4 things and you will not get the results you want and your company will not achieve its potential.

Last week, I talked about 2 of them – having a clear growth path and linking it to action – in some detail. Here are the other two.

3.  Get Buy In

How often have we seen a team of committed people do the apparently impossible?

When people participate in the development of the growth path and understand the role they must play in making it a reality, they become fully engaged in achieving the company’s goals.

Some of the things which make that happen are:

  • The owner and management team get representatives from across the company involved in building a picture of what the company will look like in 3 years time.
  • The picture, and annual goals, is communicated throughout the company – repeatedly.
  • Departmental and individual goals are linked to the company goals.
  • Progress toward goals and targets is communicated and updated continuously.

4.  Accountability For Results

Moving a company or division along a growth path involves identifying and completing a number of initiatives, made up of specific, measurable steps or actions.

The individual who has overall responsibility for each initiative and those involved in completing the steps, must be held accountable for the success or failure of their efforts.

This is achieved by:

  • Using a process – it can be a simple Excel spreadsheet or a sophisticated, cloud-based execution management system – to track the progress of each step.
  • Holding regular, quarterly meetings to review progress and adjust plans and budgets where necessary.
  • Reflecting every individual’s performance in their compensation, promotion – or even their continued employment with the company.

So how can you tell how well your company or division is doing all 4 things? I’ll tell you more about that next time.

 

If you enjoyed this post you’ll also enjoy Sustainable Growth – How To Achieve It

Click here and automatically receive our latest blog posts.

 

Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

Stick To The Knitting – Or Diversify?

Tuesday, April 8th, 2014

I’ve followed software developer 37signals for a few years. I read CEO and founder Jason Fried’s column in Inc. magazine.Should companies stay focused on their core strengths or diversify?

I use their products. Some of our clients like Basecamp, their project management software, to manage strategy execution. We use Highrise for ProfitPATH’s CRM system.

I have a pretty high regard for the company and was intrigued, therefore, by an announcement they made in February.

Moving forward, they are going to focus on a single product – Basecamp. To make the point they even changed the company’s name from 37signals to Basecamp.

According to Fried, the product accounts for over 80% of the firm’s revenue¹. So some would argue that they must diversify, put resources and effort into growing other products to spread the risk. Otherwise they are making a big mistake, putting all of their eggs in one basket.

But are they?

Keeping a company focused on its core strengths is not a new idea. In the 1950’s Peter Drucker spoke of the need to make choices about what not to do. Peters and Waterman became famous for the phrase “stick to the knitting” when “In Search Of Excellence” was published in 1982.

What if, instead of focusing on the fact that Basecamp is 80% of the company’s current revenue, we ask 3 completely different questions?

  • What share do they have of the market for project management software?
  • What features do users want that Basecamp doesn’t currently offer?
  • Can the company grow market share, and add those new features, without increasing their payroll or overhead?

There are companies who focus tightly on a limited product offering and whose profitability is well above the average for their industry – e.g. Trader Joe’s, the U.S. retail chain².

On the other hand, there are companies who have diversified too much and who have failed. A recent example is Google’s acquisition of Motorola Mobility (which they later sold to Lenovo).

There is no one answer that can be applied universally. There are a number of factors which affect decisions like this. So I will continue to watch 37signals/Basecamp with great interest.

By the way, can anyone think of a Canadian company that has also changed its name to the name of its leading product…………..?

_____________________________________
¹ “When Staying Small Is The Bigger Bet”, Jason Fried, Inc. Magazine, March 2014, page 108
² “Basecamp’s Strategy Offers A Useful Reminder: Less Is More” Ron Ashkenas’ HBR Blog, 10 Feb 14

 

If you enjoyed this post you’ll also enjoy Don’t Fool Yourself……

Click here and automatically receive our latest blog posts.

 

Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

 

 

3 Ways Human Nature Sabotages Strategy

Tuesday, February 4th, 2014

Human nature is a wonderful thing.3 ways human nature sabotages strategy

Ask 10 people how long it will take them to complete a task and I’d guess 7 or 8 of them will underestimate the time required.

That proportion might increase if the 10 are all type A personalities – i.e. business owners or entrepreneurs.

We see this when we take teams through our strategy and business planning processes.

For example, at a specific point, we prioritize the things they need to do to close the gap between their company’s current state and where they want it in 3 years’ time.

Typically the teams want to tackle more items than is humanly possible given their resources.

There’s no ideal number of items – the complexity of each item is only 1 of the variables – but we’ve seen time and again that completing a few key tasks produces better results than taking on too many.

One point teams overlook is that the items that didn’t make the cut aren’t going anywhere. They’ll still be on the list when the top priorities have been dealt with, and can be tackled later in the year.

People don’t believe us when we tell them this. Why, because in our hectic world there are so many distractions that it’s becoming unheard of to finish a project that takes more than 10 minutes to complete.

So, we tell people to block off time in their schedule 2 or 3 days a week to work on the priorities. And we tell them to allow nothing – not voice mail; not email, not their colleagues, not even their boss – to distract them during that time.

A company’s culture can be an incredibly powerful, positive force. But it can also multiply the negative impact of human nature.

This dark side prevails when, for example, carrying a superhuman workload is considered to be the only way to prove your commitment to the company.

A negative culture is often unwittingly fostered, and maintained, by the business owner or management team. So we work on them by, amongst other things, reminding them that Michael Porter said, “the essence of strategy is choosing what not to do”.

Does that work? Do people change?

The smart ones do and, strangely enough, there appears to be a direct correlation between leaders who change and companies being successful.

 

If you enjoyed this post you’ll also enjoy The Single Biggest Thing A Business Needs To Grow

Click here and automatically receive our latest blog posts.

 

Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

5 Timeless Hiring Tips for Business Owners

Tuesday, December 24th, 2013

People are key to the success of a strategy and, therefore, a company.5 timeless hiring tips

That’s not news. It’s the very opposite.

Articles about people management regularly appear in the press and there are blog posts published daily about the impact of culture and leadership on success.

Yet some business owners still deal poorly with the people part of strategy. And it often starts with how they hire.

So, here are 5 of my favourite tips (that also aren’t new) for hiring.

1.  Be Clear About The Role. Make a list of the things the role contributes to the execution of the strategy. That will determine the skills and experience required by applicants and make the responsibilities of the position very clear.

2.  Always be Hiring. Think about everyone you meet as a potential hire, particularly those you think would be great to work with. Keep their names in a database. Build a relationship with them in case you do ever decide to offer them a job – and reduce the risk of making a bad hire. Drop those who don’t measure up.

3.  Don’t Settle For the Best of the Bunch. I mentioned skill and knowledge earlier. But you also want people whose attitude and values fit with your culture. And that combination doesn’t pop up every day. That database of potential hires can help you avoid having to settle for the best of the candidates who happen to be available. So can patience and a willingness (and ability) to wait.

4.  Consider a “Test Drive”. Hiring people you’ve worked with previously is similar to test driving a car before buying it. So is hiring someone on a short-term contract, or taking them on as a sub-contractor, to complete a project. All 3 provide an opportunity to get to know their values and attitude. That’s better than hiring someone who looks good on paper – we know that more people are “massaging” their resumes than ever before.

5.  Onboard, Onboard, Onboard. Many companies consider the hiring complete when their offer is accepted. That is just plain wrong.  An onboarding program ensures a great first impression; it allays the stress a person experiences when dealing with new processes, fresh expectations and people they don’t know; and it reduces the time it takes new employees to become productive.

You can find a more tips here.

If you enjoyed this post you’ll also enjoy Little Things Can Have a Big Impact.

Click here and automatically receive our latest blog posts.

 

Jim Stewart is the founding Partner at ProfitPATH. He has been working with business owners for over 16 years to increase profits and improve the value of their companies. LinkedIn

Post History